Pfizer Inc. — 2024 Q1

I think, Aamir, that's a question for you, then maybe Alexandre also, you can add because now we started already to register and approve the product in international markets. Aamir?

Louise, thanks for the question. So it very much appears like the RSV vaccination market is following a seasonal trend, so you expect the dynamics in Q4 versus Q1 to be different. In Q1, what we saw for the market is for older adults, it certainly attenuated over the course of the quarter. So there was a peak in the second week of January, and then a steady week-by-week decline since then.

Okay. Thank you, Aamir. Now, Alexandre?

Yes. So Louise, thanks for the questions. On the international front, we actually made great progress on ABRYSVO. As you know, we got approval in the second half of 2023 in Europe and in the U.K. And since then, we've been working with the health authority and the experts to provide medical evidence and health care system benefits associated with the protection against lower respiratory tract infection, as with RSV, and through immunizations of maternal after the immunization of all the others. So we're making good progress.

Thank you, Alexandre.

Yes, thank you. Can you [indiscernible]? Let me take that one so to clear the way. It's not new. We don't have news on danu. Everything is as we have discussed before, so we are waiting around mid-year to get the totality of the data that relates to the once-a-day formulation. And then based on the data and everything else, we will make decision for future plans. So we'll speak about them when we have more to say. However, now let's go to Aamir about the Part D redesign in 2025. Did you expect them?

Sure. Terence, thanks for the question. And as you can imagine, there's many moving parts to Part D redesign. I think relevant to our business, I think it's important to first note that as part of what already went into place with the redesign, there is no cost sharing imposed on vaccines. So that, given our significant vaccines portfolio, is a positive. And then, obviously, over the course of '24 and '25, there's other dynamics with out-of-pocket cost caps, which create better access for patients, and that is helpful to volumes, and we're starting to see that in '24 in some parts of our business, including on VYNDA.

That's very good questions. Why don't we go first to you, Dave, to speak a little bit about is doing very well. If you expect that can become accretive earlier. Also, I would like to hear some comments from Chris about the progress of the portfolio, and then Doug can comment on the IP situation, our customers.

Yes. So just maybe on Seagen from a financial perspective, obviously, clearly a very solid quarter and a very solid start to the year. I think we're not changing our expectations, both short term and long term for Seagen, but I think we're cautiously optimistic as we look forward. So probably nothing to update financially other than our continued commitment to the financial metrics that we've already established. And again, we're probably cautiously optimistic on the trends that we're seeing underlying that business at this point in time.

You want to make some comments also, Chris, about the performance of the Seagen business?

Yes, I think just to add to what Dave has said, it's early days for as he pointed out, the 302, the data was -- we just launched early this year. We've already seen 164% year-on-year pro forma growth. It's early but we're very pleased that we've got NCCN Guidelines Category 1. We've got a New England Journal publication. We've got uptake in both academic and community settings. In fact, 70% of the current accounts on the community. And we're looking forward now because I think we're well set for the future in the muscle invasive bladder cancer setting and those 2 studies that we'll read out late in 2025, '26, '27.

Thank you very much, Chris. Doug, what about the situation with the IP disputes?

Yes. VYNDAQEL and VYNDAMAX currently has U.S. patent exclusivity, excuse me, through the end of this year. But we have a patent pending patent term extension, which would take it out to December of 2028. And we may be filing additional requests for patent term extensions while that is pending. In major European markets, our patents expire in November of 2026. And in Japan, the patent expires in 2026, but there's regulatory exclusivity through March of 2029 for cardiomyopathy.

Thank you, Doug. Thank you, Akash.

Yes, so this is Dave. We're always looking to improve our performance from both a gross margin and operating performance perspective. So I'll say we'll continue to focus on that. Obviously, as you know, there's 3 things that improved our gross margin rate in the quarter. Some of those are temporal. Some of those are more permanent. I think what is encouraging within our gross margin performance is the fact that our cost control element across our manufacturing platform was really strong. We expect that to be -- continue to be a focus.

Thank you very much.

Thank you very much, Vamil. Aamir, NURTEC, and then Chris, myeloma.

Thanks for the question, Vamil. So I'm happy to talk a little bit about NURTEC. We'd like to accelerate the momentum of NURTEC, and we're taking several steps to do that. For the quarter itself, what we're encouraged by is the demand and the volumes that we saw. And then on the flip side, as you already alluded to, the performance in the quarter was impacted by gross to net.

Thank you. Chris, about ELREXFIO?

Thank you, Albert. So the reason Albert didn't list ELREXFIO as a major growth driver, just to remind, so he pointed out LORBRENA, XTANDI and PADCEV as the immediate biggest growth drivers for Oncology. But we're absolutely confident that ELREXFIO will become, over the next couple of months and years, a major driver for Oncology.

Thank you, Chris. And maybe Alexandre, you have anything to add about the product in international markets?

Yes. On ELREXFIO, we actually have -- it's progressing very nicely because, as you know, we got approval in Europe in December of 2023 and in the U.K. in January, and in Japan in March 2024. So we are now moving into reimbursement, ABRYSVO. And we've got early access, considering the clinical profile, the exceptional clinical profile of the product. So that's why we got, in some market, early access, and that's why we started sales in the first quarter.

Yes. Overall, in most international markets, there is a gap between the approval and the access round. But because of the profile of the product, we saw early access, which is basically something that happens on an exceptional base if the product is unique. But some countries, before they approve the price, they are allowing you to have access to your own price and that they may be adjusted. So -- but there's a very good signs for this product. We are really feeling very bullish when we see the clinical profile and the opinions of the key opinion leaders.

You, Dave, you don't have a limit.

Thank you very much, Dave. So Dave Denton, please, you take the cost structure.

Yes. First, as you well know, rightsizing our cost structure is incredibly important for us from -- as we think of forward for margin expansion and improving our financial returns. As we look through Q1 and through the balance of the year, keep in mind that the cost changes that we've made in the U.S. are largely complete. Obviously, in ex U.S., some of those changes lag, but you will see changes in the cost structure ex U.S. for the balance of the year.

Thank you, Dave. And Doug, can you please clarify a few things about VYNDAQEL to Dave Risinger's question?

Sure. Just to be clear, Dave, we shouldn't think beyond December 2028 on VYNDAQEL and VYNDAMAX. So we've got a patent term extension that is filed and is pending. And all I was saying was that, in addition to that patent term extension, which would take it out to December 2028 that we filed and is pending, we may file additional patent term extensions, again, though, just to take it out to December 2028. I hope that's clear.

Thank you for clarifying that.

Well, maybe I'll take that first. From a guide perspective, I would not -- we obviously did not expect this final adjustment. It was an estimate that we did at the end of the year. We're now finalizing the adjustment based on the returns that we've seen, and it is now complete. I would say that, as we look forward for the full year, both for PAXLOVID and for the full year of all of our products, we're cautiously optimistic about where we are.

Thank you, David. And Mikael, on the ACIP meetings and the June-October recommendations, et cetera.

Yes. First, to punctuate, good to hear you interested in our RSV vaccine. We have a lot of positive and informative data that's coming in 18 to 59. We have already been out sharing a robust outcome for that. And filing is imminent to happen in U.S. FDA. We also have data coming on second season, full second season and data so far that have been available show robust and probably best-in-class profile for us. And you heard AAMIR mention, we also have new delivery format. So there is a lot of positive things happening to further strengthen ABRYSVO.

Internal a couple of comments for those -- both of these questions. On the ACIP, we always don't speak for ACIP. So it's not appropriate, do ll do what they can to do. Of course, typically, as we say, they wait to see FDA approvals, and we hope that they will ask us to present the data in June, but it's something that we don't know. What we know is that whatever they decide, whenever they decide we have prepared our marketing and commercial plans in the U.S., as we do, of course, in other countries so that we can maximize the approvals or the recommendations or the data that we have. So that's 1 thing.

I think David can take both of them. Dave?

Yes. On the gross margin side, as I said, there is a couple of things that impacted favorably our performance in Q1. The items that you listed of both new product launches and in-sourcing, the in-sourcing is probably a longer-term implication to us because those don't happen in an immediate quarter. So as you think about Seagen, it's probably a multiyear phenomenon that we have here. But I don't think that was an outsized impact to that.

Thank you, David. And although your answer was very complete, I will just reiterate something that you said because it seems like that some people, they want to hear it again. The dividend is a sacred cow for us. Dividend, it is secured, and we will continue our policy on dividend as we have promised repeating. And we don't have to monetize things to be able to see that. The reason why we are looking at all our assets is because we want to maximize return on the capital.

Yes. Let's go to Chris to understand the commercial impact on Seagen and how that will take time.

Thank you very much. So as you know, we had a number of months planning prior to close to ensure we had a seamless integration. And we completed cross-training of our commercial field force teams in January, especially for breast cancer, between TUKYSA and IBRANCE, but also hematology between ADCETRIS and ELREXFIO. And we should start seeing that further playing out now over the coming months.

From my perspective, yes, of course, we have invested so much into this business, and we think that this is an area that we can make a huge difference to the world. I'm monitoring that very closely. I'm very impressed actually, I would say, nicely surprised on the positive side how well both on the Pfizer impact of day 1 plus 1 equals 3 rather than 2. But already, we'll start seeing it both in the research organization because we are putting now a lot of Phase III on starts.

So as it relates to your question regarding capital allocation, clearly, our first priority, our #1 priority is supporting both the dividend as well as delevering our balance sheet. So that is job 1 from my perspective. As it relates to bolt-on acquisitions, in the near term, you would not expect us to do much there. We are -- that is a lower priority in the near term until we get ourselves. I hope that helps.

Thank you.

Thank you very much. Chris?

Yes. Thank you very much for the question. Just a reminder to point out with IBRANCE that over 773,000 patients have now been treated globally with IBRANCE. So it is currently still the CDK4/6 leader. We're very excited about 2 programs: vepdegestrant, which we believe to be best-in-class next-generation receptor degrader and also atimociclib, next-generation CDK4 specific inhibitor.

Thank you, Chris.

Aamir, do you have any comments on that?

Sure. So Carter, I think you heard us describe the dynamics. And later this year, we will have more clarity on what that means. And so we can certainly share that. I think there's also a specific question that comes up often about Eliquis, so let me just address that now because we are clearly in a live negotiation on that.

Yes. And I guess, as it relates to 2025 and the impact of the IRA from a margin expansion perspective, I would say, without giving any specifics on that is, as we look forward, we obviously run multiple scenarios around how our business might perform. And in those scenarios, we would model different impacts to the IRA because it's still unclear because it's still a lot of moving parts, specifically as we just spoke about. Under those scenarios, we will work hard to offset any implication we might have through improving our cost structure.

And I want on the IRA, and also, we said something, but clearly, in 2025, we will have 2 events that are happening, which are -- we will have to contribute to -- as a pharmaceutical industry, so that will put pressure on the pricing, let's say. But also, because of the significant pains in the out-of-pocket dynamics, and which I hope that will be implemented, as the law says, immediately because I'm hearing efforts to try to play with that.

for health care system, for the patients, for us. And so I'm not that concerned about that for the industry as a whole. I'm very concerned for the industry as a whole with the mandatory cost reduction. There is no negotiation there. They are just cutting prices, but are occurring for biologics and for more volumes, particularly.

Okay. Great. So yes, I think we just gave some color around gross margin being closer to 70% versus closer to 80% when we entered 2024. We are maintaining that color at this point in time. I would say that it's unlikely for our gross margin rate to fall below 70% in any given quarter. But I want to just emphasize the gross margin rate will fluctuate a bit, primarily given the mix of sales, specifically within the vaccine portfolio, which carries a lower gross margin, number one.

And as I want to emphasize that on PAXLOVID, what really makes me pleased it is the underlying demand of the product, right? So it was approximately in the first quarter and in the U.S., 2 million scripts, right? So that's significant. And keep in mind that this was the quarter that we moved from a previous way of go-to-market approach to a commercial model, right? But I had a lot of mines in execution, but we didn't step into any of them. So it was Again, I'm very pleased how Aamir and the U.S. team executed on that. executive. So we have a very small transition with very low [indiscernible] commercial plans.

Aamir?

Okay. Chris, thanks for the question. So on Prevnar, you alluded to the commentary we provided around dimensionalizing the market, and I think it's worthwhile just reiterating that. So the adult market continues to contract and that's for 2 reasons. There are increasingly fewer eligible 65-plus adults. And then the 19 to 64 underlying medical conditions, population is obviously more difficult to activate. So that is a dynamic that is true for our business, but it's also true for any competitor that's going to come into the adult vaccine market. So I think that's important to note.

Alexandre, very quickly, anything on PCV in international markets?

Yes. No, we had a great quarter. As you know, we grew by 8% operationally. But more importantly, we also have achieved some key milestones. So we got the European approval of pediatric Prevnar 20 in Europe. We also got it approved in Japan, which are very important market in Australia and many others. So this is great because then we want to build on the very successful [ pre nup ] franchise around the world. As you know, we have exclusive NIP standards in [ 130 ] market, and now we're going to be able to build on that.

It's a very nice cadence of approval and recommendation.

Yes, thank you for the question. I would say that without giving -- since we don't guide to quarterly expectations for gross margin, I would just say that the focus that we have around improving our cost of goods sold is a multiyear journey. And these costs that we are working to improve take time to adjust and to further implement ways to be more effective and efficient in this infrastructure.

Thank you.

Aamir?

Thanks, Chris. So on Abrysvo, as I said, we're progressing our contracting conversations so we'll have more to share on that as we do later. And in terms of your question on VYNDA, VYNDA had a really strong quarter. We were up 96% year-over-year, but importantly, also 41% over last quarter. When you look at the drivers, I think there's a few things. Some of that is temporal. So there were some purchasing patterns with wholesaler and specialty pharmacies.

Thank you. Alexandre, anything to add?

Yes, very quickly. On the international front, we also had a very strong quarter because we saw a 28% operational growth but a 43% volume growth, which is comparable to what we see in the U.S. Exactly as Aamir said, there is still opportunity because we basically have established VYNDAQEL as the standard of care. And we've worked with the health care professional to establish robust infrastructure so that we can screen, diagnose, and treat faster.

Thank you very much. Next question. We'll take 2 more questions because we are running out of time.

Thank you. Mikael, excite us all.

Yes, yes. I'm excited about the potential approval for mastozimab for both hemophilia A and B to continue to grow our hematology franchise momentum. [indiscernible] in therapy, we actually today got the equivalent of Breakthrough Designation RMAT based on the early clinical data available, so we are super excited about that. And relatively near term, the readout is coming. COVID/flu combination vaccine, [ 859 ] readout Phase III. And then [indiscernible] pipeline onsegrimab which I think pending readout has really a breakthrough mechanism.

Anything from your side, Chris?

Perhaps just to mention again the potential unprecedented new 5-year data for Lorbrenla, which will be presented at ASCO. We could define the growth of Lorbrenla over the next decade. There's 2 other upcoming readouts.

That's good if we are talking to that [indiscernible]

And there's 2 other readouts that's important to us, the 1 is Breakwater, which is the first-line opportunity in BRAF-positive colorectal cancer. A reminder that, that's up to 12% of colorectal cancer. Particularly poor prognosis so we're looking forward to that readout, Breakwater and then also, as mentioned earlier, VERATEC 2 in second-line ER-positive breast cancer, which can define also the to define the future path for.

Thank you very much.

Yes. On the obesity and Mikael also can comment, of course, together with the mRNA flu vaccine. But I said multiple times that first of all, metabolic is an area that traditionally very big strength in terms of And this is an area that we have the right to win. So we are strong and to keep investing in the whole area because we have the infrastructure. And obesity is a very big part of it, even the of the market. So we will be very active in the obesity with current mechanism of actions and new mechanisms of actions.

I think you said it so well on obesity. I'll focus on mRNA vaccine and just say that we did share that we had a very robust data for 18 to 59 in the outcome event trial on the first generation flu mRNA platform. We actually further refined that product in order to expand activity against these serotypes although the disease is dominated by A, we saw an opportunity to do that. And that technology is now with the COVID/flu combo vaccine running for 18 to 59 years old and relatively soon, we'll have a readout. We think that's really the near-term opportunity to bring both of the viruses under 1 simple administration approach. For the 65-plus, what you referred to was an early trial with the first generation. We have now moved focus to the second generation and are in preparation of subsequent clinical studies from them.

Thank you, Mikael. So thank you, operator, and thank you, everyone, for your interest. That was a very good call. In summary, we are very pleased with the solid start in 2024. We are cautiously optimistic about the year ahead. And with our continued progress in executing our 5 priorities, we are confident that we will continue to deliver for our patients, shareholders, and our company. Thank you again for your interest in Pfizer. We hope to have -- utilization in Fermany you have a wonderful day. Thank you.